JPMorgan to Pay $920M for ‘London Whale’ Losses

(CN) – With a rare admission of wrongdoing, JPMorgan Chase agreed to pay $920 million to settle charges stemming from its multibillion-dollar “London Whale” trading scandal last year. The settlement with U.S. and British regulators came with a declaration of wrongdoing from the global financial services company. The U.S. Securities and Exchange Commission had accused JPMorgan of misstating its financial results in the first quarter of 2012 and failing to tell its board of directors about complex deals made by Bruno Iksil, a trader nicknamed the “London Whale” because his trading portfolio was so large. George Canellos, co-director of the SEC’s enforcement division, said JPMorgan “failed to keep watch over its traders as they overvalued a very complex portfolio to hide massive losses.” “While grappling with how to fix its internal control breakdowns, JPMorgan’s senior management broke a cardinal rule of corporate governance and deprived its board of critical information it needed to fully assess the company’s problems and determine whether accurate and reliable information was being disclosed to investors,” he said in a statement. JPMorgan agreed to pay $200 million in penalties to the SEC — one of the largest penalties in the agency’s history. As part of a coordinated global settlement, the remaining $720 million in fines will be paid to the U.K. Financial Conduct Authority, the Federal Reserve, and the Office of the Comptroller of the Currency. SEC Chairman Mary Jo White demanded that JPMorgan admit wrongdoing as part of the settlement under a new agency policy requiring admissions of guilt in certain types of civil cases. JPMorgan CEO Jamie Dimon issued his own statement, saying, “We have accepted responsibility and acknowledged our mistakes from the start, and we have learned from them and worked to fix them. “Since these losses occurred, we have made numerous changes that have made us a stronger, smarter, better company,” Dimon said. While the settlements end most of the investigations into the London Whale fiasco, two separate probes — by the U.S. Department of Justice and by the Commodity Futures Trading Commission — remain ongoing. Iksil is reportedly cooperating with investors and will not face U.S. charges. The SEC in August charged two former JPMorgan Chase executives, including one of Iksil’s bosses, with trying to hide losses tied to the London Whale scandal. Javier Martin-Artajo and Julien Grout were also accused of falsifying the books and other crimes in a recently unsealed indictment.